Economics of the public sector - transparency, responsibility and participation

For: internal project of IPF

Project manager: Katarina Ott, Institute of Public Finance

Researchers:

Anto Bajo, Institute of Public Finance

Geoffrey Dixon, University of Strathclyde, Glasgow

Edgar Feige, University of Wisconsin, Economics Department, Madison

John Hasseldine, Nottingham University, Business School

Marina Kesner-Škreb, Institute of Public Finance

Mihaela PitareviŠ, Institute of Public Finance

The Croatian public sector is still in the process of making a transition towards a public sector that is compatible with the market economies. Although quite a lot has already been done along this way, further efforts have to be invested so that the transparency of it should be increased. Getting closer to Europe and the further democratisation of our society lay still further stress on the need for reinforcement of these processes. As against this, an untransparent fiscal management has a destabilizing effect, creating inefficiency and spreading inequality.

The objective of this project is to determine the dimensions of transparency that the public sector should possess. Public sector management is of central importance for the achievement of macroeconomic stability and high rates of economic growth, and transparency is one of the key elements in the management of the sector. Transparency in the public sector means the openness of the sector to the public, in particular: the structure and functioning of the government, measures of fiscal policy, public sector accounts and fiscal projections. Results expected: It is expected that the research to be carried out during work on this project will lead to results that will show how to increase transparency in the Croatian public sector. An increase in transparency is of key importance in the further development of the public sector. Fiscal transparency increases the responsibility of political structures in the management of the public sector and increases the risk politicians are exposed to if they carry through an unsustainable fiscal policy. On the other hand, a well-informed public will participate in increasing the credibility of government.

Initially, the extensive foreign literature about fiscal transparency will be studied, in particular the recommendations of the international institutions. After this, a study will be made of the existing state of affairs in the Croatian public sector, and an attempt will be made to propose measures to increase the transparency of our public sector. Mainly descriptive methods will be used in this, while everywhere possible recourse will be made to statistical and econometric methods. The importance of the proposed research: In Croatia there are many indications about major discretionary decision-making, lobbying, corruption, poor running of the public sector and so on. This project will endeavor to have an effect on increasing the transparency of the public sector and the credibility of the basic institutions of the public sector that touch on taxation, the budgetary process, the extra-budgetary institutions, in short: the entire economics of the public sector.

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